Finally, a $25 billion mortgage settlement was announced this week. Will mortgage lenders finally bring relief to homeowners who have suffered from unsustainable mortgage loans in a battered housing market? And as usual, providing personal finance advice, real estate advice and consumer advice on the Ilyce Glink Show February 12, 2012 on WSB Radio.
I have to say this upfront: I am a little disappointed in the historic $25 billion mortgage settlement touted this week. While it does represent the largest State/Federal joint settlement in history and is aimed at correcting abuses by mortgage lenders that have hurt current former homeowners, there are a few glaring problems:
- The plan is designed to help 1.75 million victims of the housing crisis, but eligibility is to be determined on a case-by-case basis.
- You are not covered if your mortgage loan was not or is not serviced by one one of the “Big 5” banks (Allied Financial (formerly GMAC Corp.), Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo).
- It could take three years or longer for homeowners to see any relief.
If you’re in trouble with your mortgage loan, three years is simply too long to wait. The “Big 5” handle approximately 55 percent of payments for U.S. mortgage loans – and that’s a great deal. But that still leaves 45 percent of homeowners outside waiting for assistance. But back to the timeline. Here’s how the settlement is supposed to be implemented:
- Next 30-60 days – An administrator will be picked.
- Following 6-9 months – The administrator, attorney generals and mortgage loan servicers identify which borrowers get help. (Note: we’re at one year already.)
- Banks then have three years to provide the required help. We can’t do better that that?
Click the hyperlink for more information on the $25 billion mortgage loan settlement.
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